Indonesia says Unilever move on palm oil "unfair"

A move by Unilever to stop buying palm oil from Indonesia's top supplier Sinar Mas and to blacklist another supplier PT Duta Palma was "unfair," Indonesian Agriculture Minister Suswono said on Friday

Aloysius Bhui | Reuters | Mar 5, 2010

A view of burnt trees in a peatland area for palm oil plantations near Teluk Meranti village in Pelalawan, Indonesia's Riau province November 11, 2009. Credit: Reuters/Beawiharta

Green campaigners and consumers have turned up the heat on European firms such as Unilever, saying these companies' palm oil suppliers are responsible for deforestation and peatland clearence that can speed up climate change.

"If there is a dispute we should ask an independent to judge objectively what was the weakness. A unilateral decision by Unilever I think is unfair," the minister told reporters.

Unilever, the world's top palm oil buyer, blacklisted Duta Palma last month, after previously halting a $33 million supply contract with Sinar Mas unit PT SMART.

"We have to prove if the accusations are right so going forward there will not be misunderstanding," added Suswono, who uses one name like many Indonesians.

The move by Unilever, and other campaigns by NGOs, has prompted palm planters in Indonesia and Malaysia to set up a forum to cooperate in promoting sustainable practices and to be united in the face of pressures from buyers.

"There have been accusations that palm oil expansion has caused deforestation, destroyed biodiversity, the natural home of orangutan and peat land," said a joint statement between Indonesian and Malaysia palm oil groups.

The palm oil industry, which has come under fire from green groups and Western consumers, set up the Roundtable of Sustainable Palm Oil (RSPO) in 2004 to develop an ethical certification system that includes commitments to preserve rainforests and wildlife.

However, there have been rifts between members with consumer giant Unilever stopping buying crude palm oil from the two Indonesian producers, both of which are fellow members of RSPO.

"Without Indonesia and Malaysia, RSPO could collapse," said Datuk Mohammad Saleh, chairman of the Malaysian Palm Oil Association (MPOA).

(Additional reporting by Yayat Supriatna; Editing by Ed Davies)

© Copyright 2010 Thomson Reuters

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